Bangalore: The emergence of Internet of Things (IoT) has turned many manufacturers into first-time software vendors who need LEM (Licensing and Entitlement Management) solutions. A survey conducted by Gartner, world’s leading IT research and advisory company, reports that their lack of understanding of the market and failing to comply with the LEM solutions will result in a 20 percent drop in potential revenue by 2020.

In the near future, IoT will transform the business for many device manufacturers. But the traditional mentality of manufacturer turned software vendors constraint them from considering extra revenue opportunities of licensing-controlled embedded software and applications. For these companies, the IoT represents a significant business opportunity which can be executed without even complying with the LEM.

By facilitating LEM, the conventional software industry and device manufacturers protect and monetize the intellectual property (IP) contained in applications. Likewise, the new generation software vendors who are riding on the IoT wave can also adapt to LEM systems that control access to the Internet-connected device, its functions and its features. Allowing manufacturers to bundle product features, capabilities and capacities, it also enables supple pricing and packaging ensuring payment, providing verified upgrade paths and creating fresh revenue flows.

“By controlling product functionality, features and capacities of Internet-connected devices via flexible licensing, device manufacturers will be better able to compete in current and new markets. They will also be able to come to market quicker with new products, new feature combinations and product enhancements. Moreover, software-controlled configuration gives manufacturers more flexibility to regionalize their offerings and develop niche solutions for specific markets without having to manufacture separate product stock keeping units (SKUs). Overall, this reduces the number of SKUs produced, lowering overall manufacturing costs while enhancing manufacturers’ ability to customize and regionalize products,” says Laurie Wurster. Research Director, Gartner.

A recent research conducted by Gartner indicates that most of the device manufacturers do not have commercial LEM system to monetize the IoT. The firm reason behind is previously, they had little or no software IP to protect. The research concludes that these companies can build an efficient LEM system as their technical and engineering background that developed the hardware will also help in building in-house LEM capabilities.